What are 'Insufficient Funds'

Occurs when an account cannot provide adequate funds to satisfy the demand of a payment.

Also referred to as "non-sufficient funds", or "NSF".

BREAKING DOWN 'Insufficient Funds'

Insufficient funds occur when someone tries to purchase an item using a check or debit card without having enough money in his or her bank account. As a result of insufficient funding, the check will bounce or, for debit purchases, the transaction will not be completed and the debit machine will return an error message.

Some banks charge penalties for NSF transactions and, in some circumstances, a number of NSFs on one account can lower the account owner's credit rating.

RELATED TERMS
  1. Bounced Check

    A slang word for a check that cannot be processed because the ...
  2. Debit

    An accounting entry that results in either an increase in assets ...
  3. Offline Debit Card

    A card that combines characteristics of both a traditional (online) ...
  4. Debit Balance

    In a margin account, money owed by the customer to the broker ...
  5. Bank Debits

    A bookkeeping term for realization of the reduction of deposits ...
  6. Debit Card

    An electronic card issued by a bank which allows bank clients ...
Related Articles
  1. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  2. Tech

    How To Keep Your Debit Card Transactions Safe

    Debit card use has become more popular than ever, but not every consumer knows what they need to do to make sure they keep their debit card safe.
  3. Personal Finance

    Debit Cards: Why They're Not As Safe As You Think

    Ditching your credit card can be a smart move, but debit isn't yet an equal alternative.
  4. Personal Finance

    What is a Bounced Check?

    Bounced check is a slang term to describe a check that cannot be processed because its writer has insufficient funds.
  5. Personal Finance

    How Debit Cards Work

    Unlike credit cards, debit cards rely only on the funds available in the user’s account, so they do not let users borrow on credit. They frequently come with purchase limits, and using one at ...
  6. Tech

    Debit Card Fraud: Is Your Money At Risk?

    As criminals are becoming more savvy, your money is becoming more vulnerable.
  7. Investing

    What's a Debit Note?

    A debit note is a document used by a seller to inform a purchaser of a dollar amount owed. As the name indicates, it is a note from the seller that a debit has been made to the purchaser’s account. ...
  8. Personal Finance

    6 Reasons You Don't Need A Prepaid Debit Card

    We'll look at six situations where a prepaid debit card might seem like a good idea, but it really isn't necessary.
  9. Personal Finance

    Credit vs. Debit Cards: Which Is Better?

    Be strategic about the card you choose.
RELATED FAQS
  1. What happens when my bank account is debited?

    Understand the process that takes place when your account is debited. A debit to your account happens when you use funds ... Read Answer >>
  2. Can a checking account go negative?

    Find out about negative checking account balances and the ramifications. There is a price to pay, but smart consumers can ... Read Answer >>
  3. What are some examples of debit notes in business-to-business transactions?

    Review some examples of debit notes in business-to-business transactions and learn why debit notes would be used instead ... Read Answer >>
  4. How do you calculate credits and debits in the general ledger?

    Know the key points when balancing a ledger and why it's essential to understand the relationship between credits and debits ... Read Answer >>
  5. Who uses debit notes in business transactions?

    Read about the types of parties that are most likely to issue or receive a debit note in the normal course of business-to-business ... Read Answer >>
  6. How do you calculate payback period using Excel?

    Understand the various fees that can be assessed on a personal or business checking account, and learn methods to avoid being ... Read Answer >>
Trading Center